It’s no surprise that black and Latino-owned small businesses have struggled to get funding from the Paycheck Protection Program (PPP).
Small community banks, however, have expanded, providing a lifeline to small black and minority businesses that have struggled. The problem was so widespread when Congress added another $ 284 billion in new funding to the PPP late last year. US $ 12 billion was specifically earmarked for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs).
This gave small minority businesses the time and attention they needed. Smaller banks, including Carver, United One, and Citizens Savings and Trust, have not only been able to help their customers, but also attract new ones, as they have also helped small business owners with whom they previously had no relationship.
Jay Reynolds of WolfCreek Consulting, a Florida-based recruitment firm, told Black Enterprise last summer that NDC, a community bank, had helped immensely with the pandemic.
“I had a couple of conversations with NDC and we went over the numbers and they were able to get this PPP funding in a pretty straightforward way, and it came at a time when it was absolutely necessary,” Reynolds said. “Through NDC and this conversation with you, [it] helped us through some terrible things that are happening to business. I don’t mean to say people are close or get fired, but I can tell you that they literally made a difference. “
Minority company owners fared much better in the second round of funding. During the first round, big companies like Shake Shack and the Los Angeles Lakers raised money before being ashamed of returning the money.
Aside from large corporations taking funds from the program, large banks did not want to work with small minority owners even if they had accounts with the bank. Some banks either ignored their smaller customers or simply turned them down on funds because they were suspicious of lending to black borrowers.
“I’ve heard many stories from clients who were eligible for these funds but didn’t trust there wasn’t going to be a catch,” Robert James II, chairman of the National Bankers Association, told NPR.
On Monday, the Biden administration made targeted changes to the PPP to ensure small businesses get the funding they need.
The changes include the closure of companies with more than 20 employees for the first two weeks after the program receives a new inflow of funds.
“When the paycheck protection program was passed, many of these mom and pop businesses were being pulled out of the way by bigger companies standing in front of the line,” said President Biden, adding that the new rules should apply. the program “is looking even more for mom and pop companies than before.”